Shedding light on the convergence debate: Using luminosity data to investigate economic convergence in Ecuador

Abstract

AbstractThe objective of this research is to analyze convergence in incomes per capita in Ecuador over the period 1992–2013. Using the National Oceanic and Atmospheric Administration’s satellite data capturing nighttime luminosity by region to proxy income, we undertake an analysis of economic convergence between provinces and cantons in Ecuador over the period 1992–2013. Traditional regression analysis alongside dynamic distribution analysis is used to verify the existence and determine the nature of convergence among Ecuadorian territories. What is found is that economic convergence across Ecuador’s provinces can be confirmed with a speed of convergence approximating Barro’s iron‐law of 2% per annum. In contrast to the expectations of finding convergence over recent years, the major progress in economic convergence was made over the 1992–2002 period. This was the period with the highest political and economic uncertainty. Investigating convergence in human development indicators such as infant mortality rates suggests that the boom‐financed period of economic prosperity did however coincide with a significant catchup of provinces lagging in human development achievements to leaders in this dimension.